World’s first ‘stock exchange’ for whisky opens

The world’s first online trading platform for maturing stocks of Scotch whisky has launched, claiming to solve the “real problem” of diminishing cash flow in the industry.

Whisky Invest Direct is an online trading platform for Scotch whisky

Whisky Invest Direct was founded by Diageo’s former commercial director for Africa markets Rupert Patrick and gold and silver online exchange Bullion Vault.

Described as a “stock exchange for whisky”, the company allows private investors to buy and sell Scotch whiskies early in their maturation process.

Since demand for aged Scotch whisky has put pressure on distillers’ cash flow in recent years, Whisky Invest Direct claims to offer an “attractive source of capital for distillers”.

Whisky investments offer a historical return rate of 7% price appreciation per year, according to the firm.

Offering casks at wholesale prices, it allows “distillers, brand builders and stockholders” to trade whisky with each other in a “transparent” environment, financing the creation and maintenance of ageing stock.

Held it in HMRC-approved warehouses in Scotland, the whisky can then be sold to leading Scotch whisky blenders.

“Scotch whisky’s long ageing process makes forecasting sales very difficult for individual distillers,” said Patrick. “Cautious production, plus the lack of a modern trading platform, has caused whisky’s traditional broking market to dry up, leaving a clear opportunity for a technology-based alternative.

“I have never been more confident about the prospects for the Scotch industry, and by using our cutting-edge platform, both investors and distillers alike can benefit from the growth of the multi-billion pound Scotch whisky market.

“Using the proven trading and custody technology behind Bullion Vault’s success, Whisky Invest Direct solves a real problem in this vital, growing UK export industry.”

Crowd-funding

Earlier this year, the firm launched on crowd-funding platform Angel’s Den. Fundraising was completed six months ago with £1.5m secured.

In addition to its trading platform, Whisky Invest Direct also features a brand-building arm that will launch a number of bottlings under the historic James Eadie label.

Whisky Invest Direct will make the majority of its income from “commissions and custody fees” on sales of whisky casks to crowd investors, while sales of its James Eadie Scotch Whisky brands will create secondary revenue.

The firm expects to launch its IPO, or achieve outright acquisition, in 10 years’ time.

Speaking to The Spirits Business, Patrick said: “Over the past 10 years, growth in Scotch whisky has been so strong that we were at risk of becoming a victim of our own success.

“We need to make sure we provide a valuable service to trade and investors. This initiative brings investors and the trade together by creating an industry brokering platform, allowing producers to plan long-term growth.

“Most reports say the next 10-20 years will be very, very solid. Inevitably some years will be better than other, but overall the outlook is amazingly strong.”

For a more in-depth look at the Scotch whisky investment industry, see the September 2015 issue of The Spirits Business magazine.